In the new issue of Regulation, economist Pierre Lemieux argues that the recent oil price decline is at least partly the result of increased supply from the extraction of shale oil. The increased supply allows the economy to produce more goods, which benefits some people, if not all of them. Thus, contrary to some commentary in the press, cheaper oil prices cannot harm the economy as a whole.

Two long wars, chronic deficits, the financial crisis, the costly drug war, the growth of executive power under Presidents Bush and Obama, and the revelations about NSA abuses, have given rise to a growing libertarian movement in our country – with a greater focus on individual liberty and less government power. David Boaz’s newly released The Libertarian Mind is a comprehensive guide to the history, philosophy, and growth of the libertarian movement, with incisive analyses of today’s most pressing issues and policies.

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Tag: bureaucracies

What do workers in finance, energy, and the federal government have in common? Very generous compensation packages, according to data from the Bureau of Economic Analysis.

When I posted federal compensation data last week, I received a flood of comments that disputed my contention that federal workers are overpaid. A common retort was that “federal workers are not burger flippers.” That’s true, but workers in the computer systems design, computer manufacturing, and chemicals industries are not burger flippers either, yet those folks also earn less than federal workers, on average.

The Bureau of Economic Analysis presents compensation data for 72 industries that span the U.S. economy (Table 6.2D). Figure 1 shows the 20 industries with the highest levels of average compensation, including wages and benefits. It also shows the average for all U.S. private industries and the average for the industry with the lowest compensation, which, indeed, includes burger flipping. (I’ve simplified the names of the industries in some cases).

Federal civilian workers have the seventh highest average compensation of 72 industries. Compensation in the federal civilian workforce is topped only by compensation in three finance-related and three energy-related industries.

Should federal compensation be so high? We are always told that the 1.9 million federal civilian workers are “public servants,” implying that they are selflessly sacrificing for the good of the nation. I’m sure that most federal workers are dedicated employees, but looking at these compensation levels, I don’t see much sacrificing going on.

It is true that there are some elite agencies in the government that need to have high compensation levels. But the bulk of the federal workforce is in sprawling bureaucracies such as the U.S. Department of Agriculture, which has a huge army of about 100,000 workers. The main job of USDA workers is to administer farm aid, food stamps, and other subsidy programs. That sort of paper-pushing work is not rocket science.

The other point I made last week is that the BEA data makes clear that federal compensation has skyrocketed this decade. Figure 2 provides more support for that claim.

Federal civilian workers had the fifth highest average compensation increase among 72 industries between 2000 and 2008. Average federal civilian compensation increased 57 percent, which compared to the overall average increase in the private sector of 31 percent.

Let’s slow this freight train down. Federal pay ought to be frozen for a period of years, at least until the economy recovers and private sector pay starts catching up.

Last week, the governor of Arizona signedH.B. 2426, which bars the state from implementing the “enhanced” drivers license (EDL) program.

If the federal REAL ID revival bill (PASS ID) becomes law, it will give congressional approval to EDLs, which up to now have been simply a creation of the federal security and state driver licensing bureaucracies.

As governor of Arizona, the current Secretary of Homeland Security signed a memorandum of understanding with the DHS to implement EDLs, and she backs PASS ID even though she signed an anti-REAL ID bill as governor. As I said before, Secretary Napolitano seems to be taking the national ID tar baby in a loving embrace.

Since the mid-1990s, the Defense Department has been legally required to review its strategy and force structure every four years, producing what’s called the Quadrennial Defense Review.

The result has been a series of vacuous documents that commingle vague, unsubstantiated claims about great historical shifts underway (think Tom Friedman but without the empirical rigor) with threat inflation. There is no evidence that these documents have produced much beyond wasted time and effort.

Naturally, the Department of Homeland Security decided to produce a quadrennial homeland security review, which is underway. Last week, ForeignPolicy.com reported that the State Department will get in on the act with a Quadrennial Diplomacy and Development Review. Apparently grand strategy documents have great allure to policy-makers. So it’s worth reflecting on why the QDR has failed.

I say it’s because strategy is overrated. The idea is that government is a scientific enterprise where smart people get together, figure out the wisest course, and then marshal their bureaucracies to the new objectives. The trouble with this view is that government is political; it is about competing bureaucratic interests or ideologies trying to impose their preferences on each other. Strategy documents have no inherent power over these forces.

In practice, because the military services participate in the QDR’s production, it is an output of the politics it is supposed to guide, a logroll that justifies existing realities. The services all employ manpower to defend their prerogatives. Consultants get hired. A great fuss occurs. Compromise language carries the day, and the thing winds up vapidly endorsing the existing force structure and programs.

A better way to go would for the Office of the Secretary of Defense to use strategy documents to give its views official heft; one more way to impose their preferences on the rest of the Pentagon. That argues for civilian authorship, not service inclusion. Of course, this method is only as good as OSD’s ideas.

The next QDR is due this year. The document will likely endorse the Secretary Gates’ desire to make the military better suited to counterinsurgency, which is OK, and overstate our ability to succeed in these wars, which is not.

The owner of the document is the Undersecretary of Defense for Policy, Michelle Flournoy, who previously founded the Center for New American Security, which has, in its brief life, exhibited great enthusiasm for counterinsurgency campaigns or US military-led nation-building.

Flournoy and a co-author just published a kind of preview of the QDR in Proceedings, the Naval Institute’s magazine. The article not encouraging. It cites the disastrous vehicle of Cold War threat inflation, NSC-68, as an example to emulate. Unsurprisingly it buys into the trendy idea that future US wars will be hybrid wars, mixing conventional and unconventional tactics as Hezbollah did in 2006 in Lebanon. It takes the conventional position that the United States has to police global commons (space, cyberspace, airspace and sea lanes), to protect the “international system.” This apparently means that free trade requires US military hegemony, a common claim with a hazy causal logic. The article makes the curious argument that because the commons are a public good, other nations have “powerful incentives” to help the United States police them. I am all for burden sharing, but this misunderstands the meaning of public goods, which are notoriously underprovided. Powerful incentives encourage free-riding, not mutual aide.

Worst of all, the article buys into the idea that the United States needs to fix failed states, which is a recipe for empire.

The good news is that there is time to fix all this. Maybe the Pentagon will embrace restraint. You never know.

For years we’ve been told that charter schools are the future of public schooling. The reverse is true.

The pattern in publicly funded education, both domestically and internationally, has always been one of increasing regulation over time, and of the triumph of producer interests over the interests of parents and children. Public schools in the late 1800s had considerably more autonomy than do most modern charter schools. Over time, public schools have come under the sway of centralized bureaucracies dominated by employee unions.

That same pattern is playing out in the charter school sector. As the Associated Press reports today, the American Federation of Teachers has just signed several more collective bargaining agreements for charter school teachers in New York City and Chicago. Meanwhile, federal education secretary Arne Duncan has been calling for more government “accountability” (read: “regulation”) for charters, singing from the union’s hymnal. From the AP:

AFT president Randi Weingarten said the administration’s push for more charter schools must come with stricter regulation. “You can’t do one without the other,” Weingarten said.

Duncan struck the same tone Monday, saying that only high-quality charters should be allowed to operate.

If you want to know what charter schools will look like in a generation or so, just look at the public school status quo.

A month ago, President Obama issued a list of proposed spending cuts that I dismissed as “unserious” due to the fact that they were trivial when compared to his proposed spending and debt increases. Today, the House Republican leadership released a list of proposed spending cuts.

I’d love to say I’m impressed, but I can’t.

Both proposals indicate that neither side of the aisle grasps the severity of the country’s ugly fiscal situation, or at least has the guts to do anything concrete about it.

The GOP proposal claims savings of more than $375 billion over five years, the bulk of which ($317 billion) would come from holding non-defense discretionary spending increases to no more than inflation over the next five years.

First, it should be cut – period. Second, non-defense discretionary spending only amounts to about 17% of all the money the federal government spends in a year, so singling out this pot of money misses the bigger picture. At least, defense spending, which is almost entirely discretionary, should be included in any cap. But it has become an article of faith in the Republican Party that reining in defense spending is tantamount to putting a white flag in the Statue of Liberty’s hand.

The second biggest chunk of savings would come from directing $45 billion in repaid TARP funds to deficit reduction instead of allowing the money to be used for further bailing out. That’s a sound idea as far it goes, but I can’t help but point out that the signatories to the document, House Republican Leader John Boehner and Minority Whip Eric Cantor, voted for the original $700 billion TARP bailout. Proposing to rescind the Treasury’s power to release the remaining funds, about $300 billion I believe, should have been included.

According to the proposal, the rest of the cuts and savings comes out to around $25 billion over five years. Like the specific cuts in the president’s proposal, they’re all good cuts. But the president detailed $17 billion in cuts for one year and I generously called it “measly.” What am I to call the House Republican leadership specifying $5 billion a year in cuts?

Take for example, proposed cuts to the Department of Housing and Urban Development (HUD), which is likely to spend around $65 billion this year. Having recently spent a couple months analyzing HUD’s past and present, I can state unequivocally that it’s one of the sorriest bureaucracies the world has ever seen. Yet, the House Republican leadership comes up with only one proposed elimination: a $300,000 a year program that gives “$25,000 stipends for 12 students completing their doctoral dissertation on issues related to housing and urban development.” The only other proposed cut to HUD would be $1.7 billion over five years to the Community Development Block Grant (CDBG) program. This notoriously wasteful program is projected to spend over $8 billion this year alone. Eliminate it!

The spending cuts the country needs must be substantial, serious, and put forward in the spirit of recognizing that the federal government’s role in our lives must be downsized. Half-measures are not enough, and from the Republican House leadership, wholly insufficient for winning back the support of limited-government voters who have come to associate the GOP with runaway spending and debt. For a more substantive guide to cutting federal spending, policymakers should start with Cato’s Handbookchapter on the subject.

Ever cross your mind that there’s a reason government programs increase over time? I’ll clue you in: Programs increase because of public demand.

It’s not rocket science, people want more services. Period. Somebody’s got to pay for them. Hences taxes. Or perhaps borrowing. Or a combination of both. In any event, there’s no evidence people are willing to get along with fewer services.

The situation seems simple to me; so why can’t you ideologues on the far right understand what’s going on. Instead, you simply go on bemoaning the existence of programs and taxes you don’t like.

There are numerous problems with this reader’s views, including constitutional problems. But one thing that strikes me is the underlying assumption of the “public interest theory of government,” or the idea that democracies and bureaucracies operate to efficiently provide “services.”

In reality, there are structural problems in government that bias policymakers toward fiscal irresponsibility, as our current $1.8 trillion federal deficit indicates. The issue is not ideology, it is scientific: Does the government actually work as the optimists, like this reader, believe? I think the empirical evidence is in on that question.